Final Results

Chairman's Statement I am pleased to present the results of the Company for the year ended 30 April 2008. Overview of performance for the year ended 30 April 2008 In light of the economic uncertainty and turmoil in financial markets during the last twelve months, this has been a challenging period for investment companies. This is clearly evidenced by the stock market indices discussed below, all of which fell significantly. Several of our VCT peers have seen annual reductions of between 10% and 20% in their net asset values. In contrast, the performance of your Company has been relatively stable, with some encouraging results. Our Ordinary Shareholders have seen a small decrease in net asset value, but a healthy 6 pence per share dividend has been maintained. Our C shareholders have seen a small increase in net asset value and an increased 2.5 pence per share dividend. The Company's total Ordinary Shareholder (NAV) return declined by 3.6% in the year, from 122.03 pence per share to 117.70 pence per share. An interim capital dividend of 4.5 pence and an interim income dividend of 1.5 pence for the year have been declared and will be paid in July. The Company's total C Shareholder (NAV) return showed an increase of 2.9% from 97.15 pence per share to 99.98 pence per share. An interim income dividend of 2.5 pence for the year has been declared and will be paid in July. By comparison, during the twelve-month period ended 30 April 2008 the FTSE All-Share Index fell by 7.6%, the SmallCap Index by 23% and the AIM Index by 17.3%. Revenue and Capital returns for the year ended 30 April 2008 The results for the year ended 30 April 2008 are set out in the following pages. The total return (after tax) attributable to the Ordinary Shareholders for the year was a loss of £633,730 (2007: Profit of £2,378,445) and the net asset value ("NAV") per Ordinary Share at 30 April 2008 was 96.91 pence compared with 107.24 pence as at 30 April 2007. This fall is mainly explained firstly, by a dividend of 6p in respect of the year ended 30 April 2007 having been paid on 19 September 2007 and secondly, a fall in valuations of unrealised investments. The after tax revenue return before net capital gains was 1.82 pence per Ordinary Share for the year to 30 April 2008 (2007: 1.54 pence). The total return (after tax) attributable to the C Shareholders for the year was £259,528 (2007: £258,730) and the NAV per C Share at 30 April 2008 was 98.48 pence compared with 97.15 pence as at 30 April 2007. The after tax revenue return before net capital gains was 2.65 pence per Ordinary Share for the year to 30 April 2008 (2007: 2.30 pence). This year's macro-economic environment has been considerably tougher than the previous year's and the Board is encouraged by these results. In the case of Ordinary Shareholders, the performance continues to reflect the benefits of the change in investment strategy pursued since September 2005, which has begun to deliver stronger income flows to the Ordinary Share Fund, and now the C fund. This has been combined with some net increases in the valuations of both Funds over that time, although the valuation of the Ordinary Share Fund has reduced slightly at this year-end, mainly in response to the falls in quoted markets. New Investment Activity This year has seen the Ordinary Share Fund invest £1.3 million in two new investments, and one follow-on investment alongside the C Share Fund, which co-invested £1.1 million. The C Share Fund also invested a further £1.4 million in two other new investments, when the Ordinary Share Fund was temporarily fully invested and hence unable to co-invest. Thus, the C Share Fund invested a total of £2.5 million in the year. All of these investments were in management buy-out ("MBO") transactions by your Investment Manager, Matrix Private Equity Partners ("MPEP"). A feature of MBO investments is their ability to generate income to the Funds by investing in loan stocks as well as ordinary shares. The annualised yield from loan stocks at valuation is now running at 9.2% and 9.0% to the Ordinary and C Share Funds respectively. During the year interest and dividend income totalled £0.575 million, an increase of 34% over the previous year. Portfolio Activity In January and February of this year, the Ordinary Share Fund realised its investments in Gyro International for £2.4 million, against original cost of £750,000, and a return of over 3 times the original investment in 3 years, BBI Holdings plc for £262,000 against cost of £119,000 and Clarity Commerce Solutions plc for proceeds of £162,000 against a cost of £510,000. In April, part of the loan stock held in VSI Limited was redeemed for £148,000, being a premium on cost of £13,000. This Fund now holds twelve investments made since the change of investment strategy in 2005, accounting for almost 56% by cost and almost 68% by valuation of the Fund's assets. Eleven of these investments are MBOs. The C Share Fund currently holds investments in ten companies, showing valuations at this early stage of this portfolio's life which are 5.4% above cost. Although at an earlier stage of development, this fund realised its investment in BBI Holdings plc, realising £183,000 against a cost of £83,000, and also received proceeds of £50,000 at a premium on cost of £5,000 upon part of its loan stock investment in VSI Ltd. All investments held by the Company continue to be valued in accordance with International Private Equity Venture Capital Valuation ("IPEVCV") guidelines. We will, in any event, always follow a consistent and prudent valuation policy. The investments quoted on AIM and the money market securities are carried at market value. Dividends The revenue account generated a net revenue return for the year of £214,894 for the Ordinary Share Fund (2007: (£190,379)) causing the Ordinary Share Fund's revenue reserve to become positive by the end of the year, and £242,682 for the C Share Fund (2007: £210,137). The dividends declared as interims for the year ended 30 April 2008 will be paid on 23 July 2008 to Shareholders on the register on 27 June 2008. Your Directors will not be recommending a final income or capital dividend for Ordinary or C Shareholders. New capital raising Your Board has decided to seek to raise additional capital in the C Share Fund by launching an offer of new shares towards the end of this calendar year. We anticipate that there will be significant opportunities to invest over the medium term and intend the Company to have adequate liquidity to participate fully in these opportunities, alongside other MPEP-advised VCTs. Such a fund-raising will enable the Company to achieve better economies of scale by spreading its running costs across a larger capital base and will give existing and new shareholders the opportunity to invest further at what may be an advantageous point in the economic cycle. The Board will be seeking shareholders' permission to issue this additional share capital through resolutions to be tabled at the Annual General Meeting on 10 September 2008. We consider that these resolutions are in the best interests of the Company and its Shareholders as a whole and recommend Shareholders to vote in favour of them, as they intend to do in respect of their own beneficial holdings totalling 40,900 Ordinary shares (0.36 per cent of the issued Ordinary share capital) and 47,475 C Shares (0.51 per cent of the issued C Share capital). Outlook In my Statement in the Half-Yearly Report to shareholders, I emphasised that the Board and the Investment Manager are paying close attention to current economic indicators. The scale of economic and market downturn is as yet uncertain, but there is clearly a heightened risk to the smaller company sector in which your VCT invests. Your Board continues to believe that the Investment Manager's strategy of investing in MBOs is appropriate, and that, looking forward, good opportunities will present themselves for new investment. The current portfolio is still performing satisfactorily, and there remains scope for further attractive returns to shareholders in the medium term. Conclusion I would like to express my thanks to all Shareholders for your continuing support of the Company. I hope to have the opportunity of meeting you at the Annual General Meeting on 10 September 2008. Nigel Melville Chairman 14 July 2008 Responsibility Statement The Directors confirm that to the best of their knowledge: (a) the financial statements, which have been prepared in accordance with applicable accounting standards in the United Kingdom, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and (b) the Chairman's Statement and Investment Policy include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. Investment Policy The VCT's policy is to invest primarily in a diverse portfolio of UK established, profitable, unquoted companies to generate capital gains from trade sales and flotations. Investments are structured as part loan and part equity in order to receive regular income and to provide downside protection in the event of under-performance. Investments are made selectively across a number of sectors, primarily in management buyout transactions (MBOs) i.e. to support incumbent management teams in acquiring the business they manage but do not own. Investments are primarily made in companies that are established and profitable. Uninvested funds are held in cash and low risk money market funds. UK Companies The companies in which investments are made must have no more than £15 million of gross assets at the time of investment to be classed as a VCT qualifying holding. VCT regulation The investment policy is designed to ensure that the VCT continues to qualify and is approved as a VCT by HMRC. Amongst other conditions, the VCT may not invest more than 15% of its investments in a single company and must achieve at least 70% by value of its investments throughout the period in shares or securities in qualifying holdings, of which a minimum overall of 30% by value must be ordinary shares which carry no preferential rights. In addition, although the VCT can invest less than 30% of an investment in a specific company in ordinary shares it must have at least 10% by value of its total investments in each qualifying company in ordinary shares which carry no preferential rights. Asset mix The Investment Manager aims to hold approximately 80% by value of the VCT's investments in qualifying holdings. The balance of the portfolio is held in readily realisable interest bearing investments and deposits. Risk diversification and maximum exposures Risk is spread by investing in a number of different businesses across different industry sectors. To reduce the risk of high exposure to equities, each qualifying investment is structured using a significant proportion of loan stock (up to 70% of the total investment in each VCT qualifying company). Initial investments in VCT qualifying companies are generally made in amounts ranging from £200,000 to £1 million at cost. No holding in any one company will represent more than 10% of the value of the VCT's investments, based on cost, at the time of investment. Ongoing monitoring of each investment is carried out by the Manager generally through taking a seat on the Board of each VCT qualifying company. Co-investment The VCT aims to invest alongside four other Income and Growth VCTs advised by the Manager with a similar investment policy. This enables the VCT to participate in combined investments by the Investment Manager of up to £5 million. Borrowing The VCT has no borrowing and does not have any current plans for future borrowings. Management The Board has overall responsibility for the Company's affairs including the determination of its investment policy. Investment and divestment proposals are originated, negotiated and recommended by the Manager and are then subject to formal approval by the Directors. Matrix Securities provides Company Secretarial and Accountancy services to the VCT. Principal risks, management and regulatory environment The Board believes that the principal risks faced by the VCT are: - Economic risk - events such as an economic recession and movement in interest rates could affect trading conditions for smaller companies and consequently the value of the VCT's qualifying investments. - Loss of approval as a Venture Capital Trust - the VCT must comply with Section 274 of the Income Tax Act 2007 which allows it to be exempted from capital gains tax on investment gains. Any breach of these rules may lead to the VCT losing its approval as a VCT, qualifying shareholders who have not held their shares for the designated holding period having to repay the income tax relief they obtained and future dividends paid by the VCT becoming subject to tax. The VCT would also lose its exemption from corporation tax on capital gains. - Investment and strategic - inappropriate strategy or consistently weak VCT qualifying investment recommendations might lead to under performance and poor returns to shareholders. Investment in unquoted small companies by its nature involves a higher degree of risk than investment in companies traded on the London Stock Exchange main market. Smaller companies often have limited product lines, markets or financial resources and may be dependent for their management on a smaller number of key individuals. This may make them more risk-prone and volatile investments. - Regulatory - the VCT is required to comply with the Companies Acts, the rules of the UK Listing Authority and United Kingdom Accounting Standards. Breach of any of these might lead to suspension of the VCT's Stock Exchange listing, financial penalties or a qualified audit report. - Financial and operating risk- inadequate controls might lead to misappropriation of assets. Inappropriate accounting policies might lead to misreporting or breaches of regulations. Failure of the Manager's and Administrator's accounting systems or disruption to its business might lead to an inability to provide accurate reporting and monitoring. - Market risk - movements in the valuations of the VCT's investments will, inter alia, be connected to movements in UK Stock Market indices. - Asset liquidity risk - The VCT's investments may be difficult to realise. - Market liquidity risk - Shareholders may find it difficult to sell their shares at a price which is close to the net asset value. The Board seeks to mitigate the internal risks by setting policy and by undertaking a key risk management review at each quarterly Board meeting. Performance is regularly reviewed and assurances in respect of adequate internal controls and key risks are sought and received from the Manager and Administrator on a six monthly basis. In the mitigation and management of these risks, the Board applies rigorously the principles detailed in the AIC Code of Corporate Governance. The Board also has a Share Buy Back policy to try to mitigate the Market Liquidity risk. This policy is reviewed at each quarterly Board Meeting. Investment Portfolio Summary as at 30 April 2008 % of net assets by Ordinary Share Fund value Date of Total first Book cost Valuation investment £ £ Qualifying investments AIM quoted investments August 150,000 107,143 0.9% SectorGuard plc 2005 Provision of manned guarding, mobile patrolling, and alarm response services Vphase plc (formerly Flightstore Group plc) March 2001 254,586 9,504 0.1% Development of energy saving devices for domestic use 404,586 116,647 1.0% Unquoted investments October 1,000,052 1,670,564 15.0% Youngman Group Limited 2005 Manufacturer of ladders and access towers Blaze Signs Holdings Limited April 2006 791,608 1,136,072 10.2% Sign writer British International Holdings Limited June 2006 832,827 904,172 8.1% Supplier of helicopter services PastaKing Holdings Limited June 2006 274,624 829,135 7.4% Supplier to the educational and food service market VSI Limited April 2006 231,020 656,004 5.9% Developer and marketer of 3D software DiGiCo Europe Limited July 2007 588,886 588,886 5.3% Design and manufacture of audio mixing desks January 975,000 490,131 4.4% Campden Media Limited 2006 Magazine publisher and conference organiser PXP Holdings Limited (Pinewood Structures) December 588,886 481,971 4.3% 2006 Designer, manufacturer and supplier of timber frames for housing Vectair Holdings Limited January 243,784 374,418 3.4% 2006 A provider of air care and sanitary washroom products The Plastic Surgeon Holdings Limited April 2008 230,986 230,986 2.1% Snagging and finishing of domestic and commercial properties Racoon International Holdings Limited December 517,350 57,644 0.5% 2006 Supplier of hair extensions, hair care products and training Award International Holdings plc March 2004 250,000 - 0.0% Sales promotion activities August 1,000,000 0.0% Recite Limited 2003 - Sales support software 7,525,023 7,419,983 66.6% Total qualifying investments 7,929,609 7,536,630 67.6% 1 Non-qualifying investments Money market funds 2 3,373,809 3,373,809 30.3% Cash 54,863 54,863 0.5% SectorGuard plc 106 62 0.0% Total non-qualifying investments 3,428,778 3,428,734 30.8% Debtors 289,975 289,975 2.6% Creditors (119,809) (119,809) (1.0%) Net assets 11,528,553 11,135,530 100.0% 1 At 30 April 2008, the Company (comprising both share classes) held more than 70% of its total investments in qualifying holdings, and therefore complied with the VCT Investment test. For the purposes of the VCT Investment tests, the Company is permitted to disregard disposals of investments for 6 months from the date of disposal. 2 Disclosed within Non-current assets as Monies held pending Investment in the Balance Sheet Investment Portfolio Summary as at 30 April 2008 C Share Fund Total Date of Book cost Valuation % of net assets by value first £ £ investment Qualifying investments Unquoted investments Monsal Holdings Limited December 769,000 769,000 8.5% 2007 Engineering services to water and waste sectors Blaze Signs Holdings Limited April 2006 606,890 666,686 7.4% Sign writer Focus Pharma Holdings Limited October 2007 660,238 660,238 7.4% Licensing and distribution of generic pharmaceuticals PastaKing Holdings Limited June 2006 191,720 578,836 6.4% Supplier to the educational and food service market DiGiCo Europe Limited July 2007 411,114 411,114 4.6% Design and manufacture of audio mixing desks PXP Holdings Limited (Pinewood December 411,114 336,474 3.8% Structures) 2006 Designer, manufacturer and supplier of timber frames for housing VSI Limited April 2006 77,623 220,419 2.4% Developer and marketer of 3D software British International Holdings June 2006 167,173 181,524 2.0% Limited Supplier of helicopter services The Plastic Surgeon Holdings Limited April 2008 161,278 161,278 1.8% Snagging and finishing of domestic and commercial properties Racoon International Holdings Limited December 361,177 40,242 0.4% 2006 Supplier of hair extensions, hair care products and training 3,817,327 4,025,811 44.7% Total qualifying investments 3,817,327 4,025,811 44.7% 1 Non-qualifying investments Money market funds 2 4,984,365 4,984,365 55.3% Cash 34,891 34,891 0.4% Total non-qualifying investments 5,019,256 5,019,256 55.7% Debtors 62,354 62,354 0.7% Creditors (100,060) (100,060) (1.1%) Net assets 8,798,877 9,007,361 100.0% 1 At 30 April 2008, the Company (comprising both share classes) held more than 70% of its total investments in qualifying holdings, and therefore complied with the VCT Investment test. For the purposes of the VCT Investment tests, the Company is permitted to disregard disposals of investments for the 6 months from the date of disposal. 2 Disclosed within Non-current assets as Monies held pending Investment in the Balance Sheet The other Funds managed by MPEP include Matrix Income & Growth VCT plc (MIG VCT), Matrix Income & Growth 3 VCT plc (MIG3), Matrix Income & Growth 4 VCT plc (MIG4) and The Income and Growth VCT plc (I&G). All of these Funds have co-invested alongside the Company in Blaze Signs Holdings Limited, British International Holdings Limited, Campden Media Limited, PastaKing Holdings Limited, PXP Holdings Limited, Racoon International Holdings Limited, VSI Limited, DiGiCo Europe Limited, Monsal Holdings Limited, Focus Pharma Holdings Limited and Plastic Surgeon Holdings Limited. All of these Funds with the exception of MIG3 have also co-invested alongside the Company in Campden Media Limited, SectorGuard plc, Vectair Holdings Limited and Youngman Group Limited. Non-Statutory analysis between the Ordinary Share and C Share Funds Profit and Loss Accounts for the year ended 30 April 2008 Ordinary Share Fund C Share Fund Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised (losses)/gains on investments held at fair value - (1,388,204) (1,388,204) - 76,422 76,422 Realised gains on investments held at fair value - 688,893 688,893 - 64,374 64,374 Income 536,833 - 536,833 490,190 - 490,190 Investment management fees (73,410) (220,231) (293,641) (51,700) (155,098) (206,798) Other expenses (204,418) - (204,418) (137,853) - (137,853) Return on ordinary activities before taxation 259,005 (919,542) (660,537) 300,637 (14,302) 286,335 Tax on ordinary activities (44,111) 70,918 26,807 (57,955) 31,148 (26,807) Return attributable to equity shareholders 214,894 (848,624) (633,730) 242,682 16,846 259,528 Return per share 1.82 p (7.20)p (5.38)p 2.65 p 0.19 p 2.84 p Average number of shares in issue 11,789,161 9,145,990 Balance Sheets as at 30 April 2008 Adjustments C Share Fund Total Ordinary Share Fund (see note below) £ £ £ £ Non-current assets Assets held at fair value through profit and loss - investments 7,536,692 4,025,811 11,562,503 Monies held pending investment 3,373,809 4,984,365 8,358,174 10,910,501 9,010,176 19,920,677 Current assets Debtors and prepayments 289,975 62,354 (74,403) 277,926 Cash at bank 54,863 34,891 89,754 344,838 97,245 (74,403) 367,680 Creditors: amounts falling due within one year (119,809) (100,060) 74,403 (145,466) Net current assets/(liabilities) 225,029 (2,815) 222,214 Net assets 11,135,530 9,007,361 20,142,891 Capital Called up share capital 114,910 91,460 206,370 Capital redemption reserve 16,896 - 16,896 Capital reserve - unrealised 856,977 208,484 1,065,461 Special distributable reserve 2,596,431 8,285,217 10,881,648 Profit and loss account 7,550,316 422,200 7,972,516 Equity shareholders' funds 11,135,530 9,007,361 20,142,891 Number of shares in issue: 11,491,008 9,145,990 Net asset value per 1p share: 96.91p 98.48p Note: the adjustment above nets off the inter-fund debtor and creditor balances, so that the "Total of Both Funds" balance sheet agrees to the Statutory Balance Sheet below. Reconciliation of Movements in Shareholders' Funds for the year ended 30 April 2008 Ordinary Share Fund C Share Fund £ £ Opening shareholders' funds 12,912,394 8,885,025 Net share capital bought back in the year (420,667) - (Loss)/profit for the year (633,730) 259,528 Dividends paid in year (722,467) (137,192) Closing shareholders' funds 11,135,530 9,007,361 Statutory Information Profit and Loss Account For the year ended 30 April 2008 Year ended 30 April 2008 Year ended 30 April 2007 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Unrealised (losses)/gains on investments held at fair value - (1,311,782) (1,311,782) - 2,712,523 2,712,523 Realised gains/(losses) on investments held at fair value - 753,267 753,267 - (205,547) (205,547) Income 1,027,023 - 1,027,023 906,689 - 906,689 Investment management fees (125,110) (375,329) (500,439) (119,557) (358,668) (478,225) Other expenses (342,271) - (342,271) (298,265) - (298,265) Profit/(loss) on ordinary activities before taxation 559,642 (933,844) (374,202) 488,867 2,148,308 2,637,175 Taxation on ordinary activities (102,066) 102,066 - (88,351) 88,351 - Profit/(loss) on ordinary activities after taxation 457,576 (831,778) (374,202) 400,516 2,236,659 2,637,175 Basic and Diluted earnings per share: Ordinary Shares 1.82p (7.20)p (5.38)p 1.54p 17.66p 19.20p C Shares 2.65p 0.19p 2.84p 2.30p 0.53p 2.83p All the items in the above statement derive from continuing operations. No operations were discontinued in the year. There were no other gains or losses in the year. The total column of this statement is the profit and loss account of the Company. Note of Historical Cost Profits and Losses For the year ended 30 April 2008 Year ended 30 April 2008 Year ended 30 April 2007 £ £ (Loss)/profit on ordinary activities before taxation (374,202) 2,637,175 Add/(less) unrealised losses/(gains) on investments 1,311,782 (2,712,523) Less realisation of revaluation losses of previous years (1,359,061) (1,596,829) Historical cost loss on ordinary activities before taxation (421,481) (1,672,177) Historical cost loss for the year after taxation and dividends (1,281,140) (1,672,177) Balance Sheet As at 30 April 2008 30 April 2008 30 April 2007 £ £ Non-current assets Assets held at fair value through profit and loss - investments 11,562,503 11,529,046 Monies held pending investment 8,358,174 10,289,021 19,920,677 21,818,067 Current assets Debtors and prepayments 277,926 147,304 Cash at bank 89,754 327,479 367,680 474,783 Creditors: amounts falling due within one year (145,466) (495,431) Net current assets/(liabilities) 222,214 (20,648) Net assets 20,142,891 21,797,419 Capital and reserves Called up share capital 206,370 211,871 Capital redemption reserve 16,896 11,395 Revaluation reserve - unrealised 1,065,461 3,268,178 Special distributable reserve 10,881,648 14,089,778 Profit and loss account 7,972,516 4,216,197 Equity shareholders' funds 20,142,891 21,797,419 Net asset value per share Ordinary Shares 96.91p 107.24p C Shares 98.48p 97.15p Cash flow Statement For the year ended 30 April 2008 Year ended Year ended 30 April 2008 30 April 2007 £ £ Net cash inflow from operating activities 15,964 100,740 Capital expenditure and financial investment Purchase of investments - equities and loan stock (3,821,514) (3,546,925) Disposals of equities and loan stock 3,131,438 2,016,346 Net cash outflow from investing activities (690,076) (1,530,579) Dividends Equity dividends paid (859,659) - Net cash outflow before financing and liquid (1,533,771) (1,429,839) resource management Financing Purchase of own shares (634,801) (167,592) Net cash outflow from financing (634,801) (167,592) Management of liquid resources Movement in money market investments 1,930,847 (537,585) Net cash outflow as at 30 April 2008 (237,725) (2,135,016) Notes: 1. Reconciliation of loss before taxation to net cash inflow from operating activities 2008 2007 £ £ Loss before taxation (374,202) 2,637,175 Unrealised losses/(gains) for the year 1,311,782 (2,712,523) Realised (gains)/losses (753,267) 205,547 Transaction costs (14,996) (609) Decrease/(Increase) in debtors 22,571 (58,361) (Decrease)/increase in creditors and accruals (175,924) 29,511 Net cash inflow from operating activities 15,964 100,740 2. Analysis of changes in net funds Cash Liquid resources Total £ £ £ At 30 April 2007 327,479 10,289,021 10,616,500 Cash flows (237,725) (1,930,847) (2,168,572) At 30 April 2008 89,754 8,358,174 8,447,928 3. Related party transactions Kenneth Vere Nicoll is a director and shareholder of Matrix Group Limited, which owns Matrix-Securities Limited, MPE Partners Limited and has a 51% interest in Prime Rate Capital Management LLP. MPE Partners Limited has a 50% interest in Matrix Private Equity Partners LLP, the Company's Investment Manager. He is also a director of Matrix-Securities Limited who provided accountancy and company secretarial services to the Company for which it received payment of £93,493 (2007: £89,551) including VAT during the year. £nil (2007: £22,202) was payable to Matrix Securities Limited at the year-end. Matrix Private Equity Partners LLP is the Company's Investment Manager in respect of venture capital investments and earned fees of £512,111 (2007: £478,225), including VAT for the year. £11,672nil (2007: £nil) was due from Matrix Private Equity Partners LLP at the year-end, in respect of the expense cap for the year. The Company has invested £1 million in a liquidity fund managed by Prime Rate Capital Management LLP, and earned income of £4,628 from this fund in the year. 4. Segmental analysis The operations of the company are wholly in the United Kingdom, and, in the opinion of the Directors, from one class of activity namely the making of investments in unquoted or AIM-quoted companies in the UK. 5. The accounts have been prepared under UK Generally Accepted Accounting Practice (UK GAAP) and, to the extent that it does not conflict with the Companies Act 1985, the 2003 Statement of Recommended Practice, `Financial Statements of Investment Trust Companies' (SORP), revised December 2005. As a result of the Directors' decision to distribute capital profits by way of a dividend, the Company revoked its investment company status as defined under section 266 (3) of the Companies Act 1985, on 7 September 2005. 6. The net asset value per Ordinary Share is based on net assets at the end of the year, and on 11,491,008 Ordinary Shares (2007: 12,041,147), being the number of Ordinary Shares in issue on that date. The net asset value per C Share is based on net assets at the end of the year, and on 9,145,990 C Shares (2007: 9,145,990), being the number of C Shares in issue on that date. 7. The revenue return per Ordinary Share is based on the return attributable to equity Shareholders of £214,894 and is based on 11,789,161 Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period. The revenue return per C Share is based on the return attributable to equity Shareholders of £242,682 and is based on 9,145,990 C shares, being the weighted average number of C Shares in issue during the period. 8. 75% of the fees payable to the Investment Manager are charged against realised capital reserve. This is in line with the Board's intended long-term split of returns from the investment portfolio of the Company. 9. The financial information set out in these statements does not constitute the Company's statutory accounts, in terms of section 240 of the Companies Act 1985, for the year ended 30 April 2008 but is derived from those accounts. Statutory accounts will be delivered to the Registrar of Companies after the Annual General Meeting. The auditors have reported on those accounts: their report was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. The accounting policies set out in the most recently published set of accounts have been followed. 10. The Annual Report will shortly be made available on our website: www.mig2vct.co.uk and will be circulated by post to all Shareholders. Copies will be available thereafter to members of the public from the Company's registered office. 11. The Annual General Meeting of the Company will be held at 4.00 pm on 10 September 2008 at One Vine Street, London W1J 0AH. The Annual General Meeting will be followed by separate class meetings of the holders of Ordinary Shares and C Shares.

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